Five Challenges of Next-Generation Biofuels

The U.S. Department of Agriculture (USDA) has just issued a report detailing the outlook and challenges of next generation biofuels. I provided some input during the drafting of the report, which hopefully was of some use. Here I select five pessimistic projections from the report. In the next essay I selected five optimistic projections.

Here are five findings from the report that promise to strongly influence the country’s direction on next generation fuels.

1. Production and Capital Costs

“Estimated production and capital costs for next-generation biofuel production are significantly higher than for first-generation biofuels.” The report quotes costs for a 100 million gallon biochemical conversion plant (e.g., cellulosic ethanol) at $320 million, and the costs for a 100 million gallon thermochemical conversion plant (e.g., gasification and conversion to liquid fuels) at $340 million. The report states that this is “more than three or four times those for corn ethanol plants.”

2. Biomass Feedstock Costs

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The report suggests that the presumed costs for purpose grown biomass have likely been underestimated. It cites POET, for instance, as assuming a $40 to $60 per ton price for corn cobs. But the report states “the range of prices may underestimate the cost of increasing biomass yields on marginal lands and the incentives required for harvesting, gathering, and delivering bulky material to the biorefinery” and “dedicated energy crops would need to compete with the lowest value crop such as hay which has had a price exceeding $100 per ton since 2007.”In a previous essay I identified this as one of the bad assumptions many biofuel producers today are making: That biomass costs will be low or even negative in the future as demand ramps up.

3. Algae Conversion Costs

The report repeats the mantra that you have heard from me many times:“Production cost estimates (net of capital costs) for growing and converting algae to fuel are significantly higher than for first- and next-generation biofuels, ranging from $9 per gallon to $35 per gallon.”As I have noted before, I think people confuse the ease of growing algae with the ease of growing it commercially and turning it into fuel.

4. Support for Cellulosic Ethanol May Be Short-Lived

The report suggests that support for cellulosic ethanol may be short-lived: “Given the limited market for ethanol as a gasoline additive (due to the E10 “blend wall”) and as a gasoline substitute (because of slow development of the E85 market), developers and investors may turn away from cellulosic ethanol in favor of production of another class of next-generation biofuels, petroleum substitute fuels. These so-called ‘drop in’ fuels can be used as gasoline or diesel substitutes in current vehicles without limit and distributed seamlessly in the existing transportation fuel infrastructure.” The report further states “There may be a shift in favored technologies underway. Several companies planning to be operational with some of the larger plants in the next several years plan to use thermochemical approaches or other processes that produce biobased petroleum-equivalent fuels.” My position on this is clear: I believe that thermochemical approaches are more scalable and less energy intensive than most biochemical approaches.

5. Scale

Fiberight is forecast to be the leading cellulosic ethanol producer for 2010 – with a production capacity of 130 barrels per day. To put that into perspective, the very small oil refinery I used to work at in Billings, Montana had a capacity of 60,000 barrels per day.

The bits I extracted are all themes that I have addressed here many times. In a nutshell, they relate to the fact that many would-be next generation fuel producers are making unrealistic assumptions about things like feedstock costs. Thus, where they project falling costs based on their optimistic projections, the USDA report forecasts that their biomass costs will be much higher than expected.

We probably won’t see a lot of cellulosic fuel at $3 a gallon. But, as peak oil starts to crimp supplies, and prices go into the stratosphere, who knows? Suppose fuel eventually costs $7 a gallon, but you can buy a 700 HP Porsche that gets 78 MPG? Or a $30,000 Chevy Volt that gets 200 MPG? Biofuels can handle all our future needs. It will cost us more per gallon, but we won’t need near as much fuel as we’re using today.

This is puzzling. There is no way you’re going to build a 100 million gallon/yr corn ethanol plant for less than $160 Million. During the building boom it was costing over $200 Million.

$3.20/gal annual capacity is, actually, almost exactly what I thought it would cost. I consider that a very “positive” number. That would give you approx $0.35 per gallon Capital Costs. Eminently doable, I think.

As for feedstock costs, you can get more more tons of switchgrass per acre than you can hay. Also, climate controls where you can grow “high-quality” hay. As a general rule, Good Hay area won’t be the best “Good Switchgrass” area.

Jeff Broin, and the folks at Poet, have been working with farmers on harvesting Cobs for several years now. If they think that they can get those cobs “in the bin” for $50.00 I’d hate to be the guy that bets they’re very far wrong.

Again, a key cost of feedstock is Transportation of same. You could run many 10 Million gpy facilities on feedstock that’s transported less than 4 miles. Cellulosic is all about “Local.”

Exxon doesn’t make money on it. Wall Street doesn’t make money on it. Saudi Arabia doesn’t make money on it. CNBC, and the Wahhabi St. Journal don’t make money on it.

But, Me and Thee. We will thrive on it. And, the Neat thing is: Those other guys won’t be able to stop it. It’s as Inevitable as anything I’ve ever seen.

We probably won’t see a lot of cellulosic fuel at $3 a gallon. But, as peak oil starts to crimp supplies, and prices go into the stratosphere, who knows? Suppose fuel eventually costs $7 a gallon, but you can buy a 700 HP Porsche that gets 78 MPG? Or a $30,000 Chevy Volt that gets 200 MPG? Biofuels can handle all our future needs. It will cost us more per gallon, but we won’t need near as much fuel as we’re using today.

By the time we’re seeing 100+ MPG on average, you have to figure that demand will have increased due to the many more miles being driven globally. There will be more people in the world, hence more vehicles on the road, and people will be traveling a heck of a lot more if they’re getting that many more miles to the gallon.

I’m just suggesting that fuel costs per mile won’t be drastically higher in the future Samuel. One way or another, people will have to adjust to peak oil. It will undoubtably mean paying more at the pump. But, they might just go much farther on much less. People won’t rush out to buy a PHEV with $3 gas. But,they might line up around the block when it hits $7 a gallon.

At some price point, biofuels and technology will come together to meet our needs. Those needs will no doubt be re-defined for most people, of course. Soccer mom might decide she doesn’t need a Hummer to get junior to practice. And, if she trades the SUV in for a Prius, her costs per mile will take a nosedive even if gas doubles in price.

I’m just saying we don’t neccesarily need 85m bpd of biofuels at any point in the future. Perhaps we can get by on much, much less.

There will be more people in the world, hence more vehicles on the road, and people will be traveling a heck of a lot more if they’re getting that many more miles to the gallon.

Samuel is correct. The more efficient we become, the more of something we use. We don’t use less of of it as postulated by William Stanley Jevons.

In economics, the Jevons paradox (sometimes called the Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource. It is historically called the Jevons Paradox as it ran counter to popular intuition.

Biofuels can handle all our future needs. It will cost us more per
gallon, but we won’t need near as much fuel as we’re using today.

It’s hard to know if this is true, because our future needs will be very different than the needs of today. I do, however, agree with you that we can’t simply use the petroleum-generation measuring stick to project how much fuel we’re going to need, as it will be a completely different world the one that’s run without oil. Like you mentioned, the increased MPG will greatly alter what we’re going to need. Heavier integration of EV’s can have a massive effect too.

Say the price of gasoline goes to $7/gallon. What happens to the price of corn? What is the cost of fertilyzer which is all energy content? What is the cost of tractor fuel? What does it cost to gather corn cobs? Since ethanol has a low eroi, high energy prices don’t really help very much.

Not yet Wendell. I am a lot more
comfortable with predictions for the future when they are based on
understanding the ‘why’ of today and yesterday.

One of the results of the
energy crisis of the 70s is that we got a lot better at producing and
using energy. In 1980 you had to get in line to buy a Tercel. In
1990, people were coming up to me on the street and making offers on
my old UV. My UV had become an SUV. A little marketing and a racing
stripe turned something good at hauling camping trailers and sheet
rock into a mean sports machine. Go figure!

Of course the why is the
Jevons paradox.

Mileage
of my UV had improved to the point where it was an economic choice
for the family vacation that not involve towing a camping trailer.
If you have ever taken a family
vacation with the Samoan slap dancing troupe (he hit me, she hit me
first) in a Tercel and a UV, you know why the 90 was the decade of
the SUV.

Harvesting corn cobs requires no additional energy. They are “harvested,” now, and discarded out the back of the harvestor. In the future they’ll just be kept. The harvestor, of course, will be running on biofuels.

I wouldn’t really call what I said a prediction. I don’t think anyone in their right mind thinks that demand will not see a huge rise in the future. Together with the fact that, if we’re able to wean ourselves off of oil and greatly increase the MPG for vehicles on the road, plus the fact that the world’s population is increasing rapidly, it stands to reason that many more miles will be driven.

I’m not predicting anything, because I don’t know the facts or have access to any data that would allow one to make projections, but I do know that demand increase needs to be taken into account.

One of the results of the

energy crisis of the 70s is that we got a lot better at producing and

using energy. In 1980 you had to get in line to buy a Tercel. In

1990, people were coming up to me on the street and making offers on

my old UV. My UV had become an SUV. A little marketing and a racing

stripe turned something good at hauling camping trailers and sheet

rock into a mean sports machine. Go figure!

Had you installed monster tires, you probably could’ve sold it for twice as much!

No mention of Marijuana as a bio-fuel source, plus you get the drug for medical use, lol, and the left over pulp a fine source for making paper products! Add this all up and it is the obvious choice, it grows in poor soils and with less water required than most other crops! It’s time for POT!

“Say the price of gasoline goes to $7/gallon. What happens to the price of corn? ”

Not much. A farmer will only use about $20 worth of diesel on an acre of corn. If diesel tripled to $7.50 per gallon, it would only mean a $40 per acre cost increase, which breaks down to about 10 cents a bushel.

“What is the cost of fertilyzer which is all energy content? ”

Now we’re talking natural gas, which could really throw a monkey wrench in the machinery were it to triple in price along with gasoline and diesel. Fertilizing an acre of corn will cost about $120 this year. Drying an acre of corn will run another $30. If both diesel and natural gas tripled in price, a corn farmer would spend an additional $340 per acre, or approximately $1 per bushel more, so a 200% increase in energy and fertilizer costs would bump up the price of wholesale corn about 30%. In a perfect world, of course.

An ethanol producer uses 1/3 of a bushel of corn and about 60 cubic feet of natural gas to make a gallon of ethanol. That’s about $1.10 for the corn and about 25 cents for the natural gas at today’s price of $4.79 per 1000 CCF. His two major costs would go from $1.35 per gallon to approximately $2.18 per gallon under this scenario. Not a bad position to be in if gasoline sold for $7.50 per gallon.

Of course, I used a lot of “abouts” and “approximations” in those calculations. Corn prices could just as easily triple even with reduced fertilizer and energy costs. Lots of variables there.

Crud. It’s late and I was rushing that example. $340 per acre would be more like a $2.00 per bushel increase, since 170 bushels per acre is about all a corn farmer can hope for. That’s roughly 60% more for corn. That brings the cost of corn and natural gas to make a gallon of ethanol up to $2.50 per gallon if fuel and fertilizer costs triple. Sorry about that.

I would agree with this for a plant size in the 50 MillionG/yr. Of course this figure could be based on a plant 8 times bigger so the 1 in 2 may be possible at larger sizes. I will see if the information is in the document.

Edit: This is based on early 2007 data which is consistent with the data in the report

By comparison, a corn ethanol plant with the same capacity [50 MillionGal/yr] could be built for about $65 million (U.S. Department of Energy, 2006).

Thus the cost difference is probably due to scaling economy (i.e. 2/3 rule) and this seems to work reasonably well.

It’s a tricky business Wendell. Sometimes farmers store high moisture corn for animal feed. They save on drying costs and can harvest earlier. But, it’s no good for ethanol, because it undergoes its own fermentation process. I guess it’s possible to go straight from the field to an ethanol refinery, but the water has to be removed from the ethanol anyway. It’s probably cheaper starting with dried corn.

In a letter to the EPA today, ADM asked the agency to allow blends of up to 12 percent for all vehicles.

“The U.S. ethanol market has reached the point of saturation,” the company said in its five-page letter. “Right now the industry is producing more than he market can absorb, resulting in more exports (to places like Korea and the Middle East), while our inventories are growing and prices are falling.” U.S. ethanol exports have surged this year as the product has become cheaper than the sugarcane ethanol made in Brazil. Brazil has been keeping its ethanol at home to meet domestic demand while augmenting supplies with some U.S. product.

It’s pretty close Wendell. We use 9m bpd of finished motor gasoline. 8.2m barrels of gas blended with 800,000 barrels of ethanol would give us all E10. We’re producing 823,000 bpd of ethanol at last count. I’m surprised more E85 isn’t being used. The spread with gasoline is over 30% in some areas.

If you start a sentence with
‘There will be …’ I think a prediction is coming Samuel . I did
not object so much to your reasoning as Wendell calling it a fact.

“Had you installed monster
tires, you probably could’ve sold it for twice as much!”

Now that is funny! Since I
was living in California, you would be right. My 4wd PU came with
monster tires and I replaced them traction ‘A’ street tires that
were on my UV that did very well in Idaho, New England, and
Pennsylvania mountain country where I lived at the time. In
Michigan, I replaced my old UV with a ¾ ton 2wd UV.

So after 20 years of driving
in the snow, I find my self in California. The good news was the
were 30 minutes from the ski slopes. The bad new is that the CHP
stops me from taking my kids skiing because my 4wd PU (old and beat
up now) does not have M&S (macho and stupid) stamped on the
tires.

I week later I am coming
home from work at 5am and find the same CHP officer with his CHP 4wd
buried in the ditch with snow up to the windows. Been there but I
was twenty. I offered him ride up to the 711 on the highway. The
CHP in the ditch explained why I could not make it up the hill with
2wd and I explained carbon monoxide poisoning. I left him in a warm
store and gave him my business card. Told him if the CHP needed
lessons in equipping cars and driving in the snow, I was available.

Back to corn. My senior
project in college was a study to use waste heat from a power plant
to dry corn (not practical). The reason is that corn was rotting on
the ground because there was a shortage of NG and propane. There is
a reason some of us old guys think making electricity with natural
gas is a waste of a good resource.

Huh? I thought you took issue with my point that the increase in demand will alter Perry’s numbers. To that I responded that I wasn’t predicting how much it would affect the calculations, since I don’t have access to data that would shed light on it. All I was saying was that future increases in demand need to be taken into account.

Now it seems like you’re taking issue with the fact that I said “There will be more people in the world,” rather than the point I was trying to bring out. You think that the world’s population will be decreasing in the future?

“You think that the
world’s population will be decreasing in the future?”

I do not know what future
world population will be. Presently it is not a factor in the
production of biofuels. One of the reasons I support producing
biofuels is because of the uncertainty of the future.

“All I was saying was that future increases in demand need to be taken into account.”

Energy demands will increase Samuel, but not necessarily demand for liquid fuels. As oil production declines, and more biofuels are increasingly needed to supplement supplies, prices will inevitably increase at the pump. At some point in the future EV’s and PHEV’s will become no-brainers. People may love their gas guzzlers, but they’ll always love their wallets more.

I agree Perry,
Plants are just not efficient converters of solar energy into chemical energy. The theoretical limit for a healthy leaf approaches 5%. They are only able to store energy in the .5%-1% range. Given a few million years large stockpiles can be built up, but trying to grow this stuff in “real time” doesn’t make sense. The energy density of corn to ethanol is ~.1 watts/m^2. http://www.transportation.anl……AF/265.pdf
If you drive 30 miles in a fuel efficient vehicle you need to burn ~1670 watts worth of gasoline. That’s 16700 square meters or 4.13 acres of corn per 30 mile trip (not considering energy to distribute ethanol). A lot of money is being spent by big oil and defense on algae produced jet fuels. So that’s where I would expect a breakthrough. But for private transportation the battery and the electric motor cometh….

You think that the world’s population will be decreasing in the future?

It’s inevitable. Do you think the human race will still exist 50,000 years from now? (Perhaps) One million years from now? (Probably not) 50 million years from now? (No) In 500 million years? (Definitely not)

It’s only a matter of time until a cataclysmic event such as an asteroid or large meteorite strike, or a mega-volcano eliminates much of life on earth.

The article says, ““Given the limited market for ethanol as a gasoline additive (due to the E10 “blend wall”) and as a gasoline substitute (because of slow development of the E85 market), developers and investors may turn away from cellulosic ethanol in favor of production of another class of next-generation biofuels, petroleum substitute fuels.”

I’m not sure what is the “blend wall”. Can someone provide me a definition and does this mean that E85 or M85 will likely not be viable in the fuel mix of the future?

We have worked and nearly completed a low cost methanol-to-gasoline process, but up until this “blend wall” comment, I was told that people were not interested in gasoline from natural gas…but only blended fuels. I have tried to show them the MTG process of Exxon, and still resistance. Is this report saying that MTG is now ok rather than E85 or M85?

We all know price is not the issue…since government money will be spent on technologies and plants that are not economic. This “blend wall” is interesting.

That can’t be right Thomas. Four acres of corn should be good for at least 600 bushels of corn, which would make 1600 gallons of ethanol. It took us 20 years to reach 800,000 bpd of ethanol production. One year of peak oil would reduce oil supplies by over 3,000,000 bpd. No way biofuels can replace the real stuff at a price many could afford. Not unless we see some major breakthroughs soon. EV’s have two major drawbacks. Price and range. Internal combustion loses the price advantage once peak oil bites. And PHEV’s solve the range problem.

“Plants are just not
efficient converters of solar energy into chemical energy.”

People like to make up
irrelevant criteria to justify their conclusions.

There is only one
overarching criteria, is energy available when and where the customer
needs it. For example I buy E10 when I fill up and electricity is
available to keep my house warm.

Regulations require that
energy be produced safely while minimizing environmental impact.

This is why we worry about
what the populations is doing. Having excess production capacity is
not a problems but facilities take years to build.

Converting a limited
resource like oil efficiently is important. However, sun light is
not a limited resources. The engineering challenge is to convert
biomass to transportation fuel locally and use it locally. For
example, in the Columbia Basis transportation fuel is barged to the
regions. Any fuel that can be produced locally and used locally
offsets the energy needed to transport the imported fuel.

Rufus has a vision of
biomass plant in every county creating jobs. Thomas thinks that
cities with nuke plants (lowest fuel transportation cost) could
electrify transportation. These concepts are not mutually exclusive.

Your numbers are Silly. Four Acres of corn will yield 2,000 gallons of Ethanol. A decent engine will take you 60,000 miles on 2,000 gallons.

The plant can be operated on the lignin, and the tractors can run on a small portion of the corn oil extracted as a co-product. The methane can be taken from the manure of the cattle fed the DDGS to produce the nitrogen fertilizer.

Natural yeast can ferment three sugars: galactose, mannose and glucose. The original Ho yeast added xylose to that, and now the fifth, arabinose, has been added.

—Dr. Nancy Ho

The addition of new genes to the Ho yeast strain should increase the amount of ethanol that can be produced from cellulosic material. Arabinose makes up about 10% of the sugars contained in those plants.

In addition to creating this new arabinose-fermenting yeast, Mosier, Sedlak and Ho also were able to develop strains that are more resistant to acetic acid. Acetic acid, the main ingredient in vinegar, is natural to plants and released with sugars before the fermentation process during ethanol production. Acetic acid gets into yeast cells and slows the fermentation process, adding to the cost of ethanol production.

Nitrogen fertilized corn yields 125 bushels/acre. The conversion rate to ethanol is 2.66 gal/ bushel. That’s 333 gallons/acre. After fertilizer and distillation, total energy cost is 77,228 btu/gal. The ethanol energy equivalent is 84,000 btu/gal (HHV). That’s about 6% efficient. Now it should be noted that this study was roundly criticized by Rsquared because of its overly optimistic corn yields and underestimated energy costs: http://www.consumerenergyrepor…..l-studies/. He also cautions against using the corn by-products of ethanol distillation to offset its energy costs.

Our energy future will not be based on an energy process that might be 6% in perfect conditions. I wonder why the USDA is doing studies on Ethanol and not the DOE…. The same coal or natural gas that’s used to run a distillery can charge a battery. Why invest in an intermediate step? Electricity is already widely accessible to people who drive cars. ~2300 Stations offer E85 in this country: http://www.e85refueling.com/.

If we assume a car engine needs ~125,000 Btus ( a gallon of gasoline) to go 30 miles. That’s 4167 BTUs/mile. So ethanol will get 20 miles to the gallon. Those of you who believe its possible to get more than 125 bushels/ acre on a national scale or get 30 mpg on straight ethanol please “step up” with sources.

But there were some bright notes, which I will address in the next essay.

Looks like Rufus has beaten you to it!

Mind you, they had better be some really bright points to overcome some of these very real shortcomings.

There is no doubt that alcohol can be a much better fuel than gasoline, to the point of getting equivalent miles per gallon.

And getting cars on the road that can take advantage of that is the key to getting past the “blend wall” by getting people to want to buy E85 fuel.

While Rufus is clearly a fan of the next Buick, I hope that GM gives the same treatment to the Volt. Being a series hybrid, the engine runs at a more constant rpm range, and can be optimised to a much greater degree than a normal engine. This is an ideal place for a high compression E85 engine. It can use variable intake valve timing to limit air intake (and thus compression) when running on gasoline, and could partly make up for the power loss by running at higher rpms on gasoline. You can run equally well on either fuel, but much cheaper on E85 (or E100).

But I have to agree with RR that the big issue is likely to be biomass feedstock. Once the cellulosics and gasification operations get going at any real scale, there will be a lot of demand for feedstock – it will be a seller’s market.

This is good news for farmers, but has the potential to upset the plans of a few producers.

I would also like to see Rufus’ plan of localised operations work. For this to happen they need some advantage big operations don;t have, such as the ability to use waste heat from some other process (e.g. a drying kiln for lumber, cement, bricks, etc) or to use some very cheap fuel (municipal waste, wood waste etc). I think the best potential is the municipal waste angle, as they often get a lot of “green” waste, which can be feedstock, and wood and other combustible waste, for cheap fuel. And of course, the methane they produce can be used without needing to upgrade to NG pipeline quality.

So all the elements are there, if only we can convince Rufus that we are better off to produce methanol instead…

You gotta work out your own “methanol” scheme, Paul. I got my hands full with “this” one.

Actually, I’m a bit more sanguine (imagine that) about “escalating prices” for feedstock than some. Due to the expense of transporting cellulose the local farmer is going to be pretty well locked-in to the local refinery. The choice will be pretty much to sell to the local guy, or grow something else. On the other hand the refinery is going to have to pay a reasonable price, or shut the doors. It’s a pretty good scenario for striking up a reasonable price.

“waste” heat is always nice, but it won’t be necessary. It seems the enzyme method kicks off a Lot of biomass pellets (enough to run the process, and have a considerable amount to sell.)

I already own a flexfuel, Wendell, and I’m well satisfied with it. I could save, maybe, four or five cents/mile, but I only drive about four, or five thousand miles/yr. I don’t think I want to fade that first-year depreciation just to save a couple of hundred on fuel. I’ll probably get one next year, after someone else has paid that 1st year cost.

1) No. A partial separation is possible doing this but there are a number of problems. A big one is where do you add the Sulphur? You are not going to do it before the beer column due to the acids present in the fermentation stream. However by that state you have already achieved a partial separation. The difference in the sulphur case you have two streams both still containing a lot of ethanol whereas the beer column produces only one stream containing a lot of ethanol. And lets not start with phases changes based on solids addition.

2) If you could get the process to work you might be able to decrease the water use of the plant. Distillation columns use a lot of water. But that is not really that big an issue as 90+% of the water used by the columns is recycled in a closed loop.

The only realistic technology I see that could reduce the energy use is (organophillic) pervaporation whereby from the fermentation stream only the organic component needs to be vapourised (as opposed to distillation where everything is vapourised). That is not there yet but I will not be surprised if I see a success in the next 10 years.

Vapour re compression is another possibility but for ethanol (or butanol) I doubt that this actually helps at all when the economics are investigated.

The world uses 84M bpd of oil today, which is equivalent to 500M gigajoules of electricity. Let’s suppose oil production drops to 42M bpd 20 years from now,but demand has grown to 100M bpd, or 600M gigajoules. Biofuel production would have to go from 1.5M bpd to almost 60M bpd. I don’t think that’s impossible. But, it’s not going to happen without putting $15 a gallon algae into the mix. A more likely scenario is ethanol, cellulosic, and other biofuels that can be made relatively cheaply, replace a small portion of lost production. Perhaps 10M bpd. The other 50M bpd will have to come from electricity. Automakers see the writing on the wall. Each of them has EV’s and/or PHEV’s in the pipeline.

At some point that EV owner is going to have a 10 year old car that needs a $15,000.00 battery. A move to EVs assures an average lifespan of 10 years instead of 20 years. Ain’t gonna happen.

PHEVs? We’ll see. Some of those batteries will start wearing out in a few years.

We could supply all of our transportation needs in the U.S. with cellulosic as easy as falling off a log. Just incredibly easy. My God, we’re a nation of Farmers, and “moonshiners.” We have been from the very start. We have plenty of land, rain, and sunshine.

The big Companies, Bankers, Unions, and Federal Socialists hate the idea. It will diminish their power. But, for Me, and Thee, it’s the nuts.

We could supply all of our transportation needs in the U.S. with cellulosic as easy as falling off a log.

Of course if it was as easy as you think, POET would be building plants instead of waiting for government handouts. It would be a no-brainer. You know, some industries actually operate like that? They see an opportunity, and invest their money.

If you are wondering, I can tell you why they are waiting. They see a very risky and questionable opportunity, and want someone else (you and me) to bear the risk.

I’ll probably get one next year, after someone else has paid that 1st year cost.

I must say I’m surprised Rufus. You talk so glowingly of the car, yet are reluctant to put any cash on the line, and prefer to let someone else try it first. If even you — the most enthusiastic of people over the concept — is holding back, how can you expect anyone else to take the leap?

Of course if it was as easy as you think, POET would be building plants instead of waiting for government handouts.

Robert,

And may I add if it were that easy, not only POET, but every other energy company would be jumping into the market. In fact, if it were really as incredibly easy as Rufus says, the board of directors would fire the CEO of any energy company that didn’t get it the market and start building plants as fast as s/he could.

It’s easy for Rufus to talk — as he does with the Buick Regal — but when it comes to actual action, that’s a horse of another color.

One last point, if it were as easy as Rufus thinks, why would a company such as BP be spending money doing something as incredibly difficult and complex as drilling oil wells under thousands of feet of water, when they could instead invest that money in one of those “incredibly easy” cellulosic-to-motor fuel plants?

Wendell, I have a very nice Flexfuel Chevy. I didn’t buy it new. I bought it a year old. I don’t take the first year depreciation on Any car. That’s just the way I roll.

The oil companies didn’t start drilling in the “deep-water” Gulf until Bill Clinton signed the “Deep Water Royalty Relief” Act (or whatever it was officially called.)

The energy markets are volatile. A small player, or even a large one like BP, can get crushed if things turn the wrong way. It would be incredibly incompetent of Jeff Broin to jump in and start spending his shareholders’ money before the water is clear, and the loan guarantees, and the regulations are in place. Jeff Broin is Not incompetent.

When the big, flashy operators like Verasun were messing up, and going broke his conservative business model just chugged right on along. I expect that’s about the way it will be in the future.

The energy markets are volatile. A small player, or even a large one like BP, can get crushed if things turn the wrong way.

I accept your concession that it is not “Just incredibly easy.”

LOL! You took the words right out of my mouth. I was already in the process of replying along those lines when I saw this.

If it was as easy as Rufus suggests – and POET was confident they could hit the cost targets they have suggested – they would be foolish to wait. Who knows whether loan guarantees will pan out? But this is so easy – according to Rufus – that they shouldn’t be needed.

Look, I’m convinced that oil prices are going higher. Do I trade oil futures? Heck No! We just watched oil go from $147.00 Barrel to $34.00 Barrel. Anyone can get crushed in a move like that.

Being a “technical” slam-dunk, and a short-term “financial” slam-dunk is Two Very Different Things. The Banks were fighting over who got to finance the next corn ethanol plant at the same time I was writing on Kudlow’s site to “Stay Away” from investing in them. This is no place for small-timers like Ms. Rufus’s Son to hang out.

Governments can fade these risks. J.P. Morgan is going to wait awhile. But, folks, these are just red herrings. Any fool can see where this has to go, and, thus, Will go. We’re just dickering over short-term issues.

Well, we’ll know that cellulosic is really viable not when Poet does it, but when Valero gets into it. They already own 10% of the US ethanol industry, and their own network of retail gas stations. They are ideally positioned to jump on any opportunities. If they take a pass on cellulosic, then I would too.

The production/capital costs you cite for a 100,000,000 GPY facility are “optimistic” at best.

I would probably put it at closer to a billion for thermochemical.

Whether you scale at 10,000,000, 100,000,000, or 500,000,000 GPY, you still have to build all the same pipes and process equipment. The only question is one of diameter and scale (and also technical scale-up risk).

We already know how to do this from a chemistry and process perspective, the problem is, to do it efficiently from a CAPEX and cost per daily barrel perspective, you have to be looking at 20,000 BPD+++ facilities. And you are talking about capital expenditures that are No Joke, and technical scale-up risks and costs that are blindsiding many a west-coast ex-dot-com “cleantech” startup.

A >100 BPD pilot is nice and all, but nobody is going to cut a billion-dollar check for a commercial scale production facility unless you can demonstrate the technical capability of the process with absolute 100% certainty. “learning on the job” the hard lessons of chemical process scale-up is simply too expensive to do on a $Billion+ 24X7X365 commercial production facility.

Add to that the multi-year many multi-million-dollar permitting exercises (often challenged by environmental types) for such plants, during a time of extreme capital shortage, and you start to see why they aren’t magically popping up everywhere.

Rufus: A recent GM study found that roughly 70 percent of its flex-fuel vehicle owners didn’t know they could use E85, and fewer than 10 % actually used ithttp://www.cars.com/go/advice/…..p;story=85

If I’m a car company or gas station chain why incur the extra expenses of e85 if nobody cares? For 2009 GM offers 23 FFVs , Chrysler 11, Ford 8, Toyota just 2. It appears # of FFV models and profitability go in opposite directions. Meanwhile people are lining up to buy hybrids and EVs. Remember I get up to $7500 off the price of the car if I go EV. Are there any incentives for FFVs besides subsidized e85 (I don’t know)? Also, I can finance a new car for a low interest rate while fuel goes straight to the credit card. I sound like a car salesman…

My point: Let’s assume that corn ethanol costs 82 000 btu/gal (HHV) to distill and its worth about 20mpg in a small car. 82 000 btu is 24 kw-h. Nissan’s Leaf has a 24kw-h battery which they claim has a 100 mi range. Let’s assume it only gets 40 mi. That would mean it uses the same amount energy and gets twice the mileage (and no tailpipe pollution). And this is the first generation lithium-ion EV. Distilling industrial quantities of ethanol is a mature technology. As Moiety said above, there is no low hanging fruit to tighten up the process. I can also distribute 24 kw-h of electricity much cheaper than I can a gallon of anything. If we want to help farmers (and raise food prices) then let’s call it “farm aid energy” not an energy solution. Now I’ll shutup.

..If I’m a car company or gas station chain why incur the extra expenses of e85 if nobody cares?

Thomas,

You are correct that very few who have flex-fuel cars actually use E85 in them. There is only one reason car companies offer flex-fuel cars: They get to take advantage of the E85 loophole our esteemed lawmakers and the bureaucrats at the EPA built into the formula used to calculate CAFE, and that way avoid paying millions in penalties for not otherwise achieving the CAFE goals.

For example, a Chevy Tahoe that gets 15 mpg is magically rated as getting 31 mpg if it is flex-fuel, even though its actual fuel mileage using E85 drops to 12 mpg, and it uses more total energy when burning E85 than when burning gasoline.

The car comes out this fall, Wendell. Since I already have a flexfuel I’m pleased with, and since I will only save a couple hundred/year I will wait a few months, and let someone else take the first year depreciation.

If you — one of the most knowledgeable and passionate proponents of the new Buick Regal — aren’t even ready to make the committment, exactly whom do you think GM is going to sell them to?

And if the car is as good as you seem to think, who will want to sell one after owning it for only one year, just so you can play them for a sucker by letting them take the first year depreciation loss?

If you actually believe in the car, head on down to your local Buick dealer Monday morning, put down a deposit on a new one, and report back to us Monday evening. If you aren’t ready to back up your words with action, please stop talking about it.

Rufus~If you actually believe in the car, head on down to your local Buick dealer Monday morning, put down a deposit on a new one, and report back to us Monday evening. If you aren’t ready to back up your words with action, please stop talking about it.

Wendall, your point is absurd and your constant repeitition only serves to make you look foolish. I’m a big fan of both the Volt and LEAF but I will buy neither because they can’t hold my family. Someone like Rufus who only drives 4000 miles a year is the last person we want buying new technology vehicles. We want heavy drivers who use lots of petroleium to buy non-petroleum cars because that gives our country the most petroleum reduction bang for our technology investment buck.

If I’m a car company or gas station chain why incur the extra expenses of e85 if nobody cares?

This is a fair statement, except for the fact that to make a car flex fuel is now an additional cost of less than $100 – cheap enough, in my opinion, to just mandate it for all gasoline engined cars.

Then, the car fleet will be ready for both ethanol and methanol (and even butanol) fuels. Given that we are finding more natural gas and less oil every day, methanol from NG starts to look like a good option. The fact that methanol and ethanol can be mixed together in any portion gives a lot of flexibility for flex fuel vehicles.

The big leap is to make them “non gasoline” cars, so you can have engines with compression of 20:1, but that is not going to happen until the alcohol fuels are more widely available.

So you’re arguing for a government mandate that all cars be FFVs. Fine, but you’ve still got to make the E85 available and the consumer has to choose to buy it. There are 100K+ gas stations and most of them are run by Big Oil. As I’ve said before its like trying to get a Beer company to push Red Wine. A number of small firms will be opening commercial EV stations across the country.You cant get reactive distribution like that with alcohols. A commercial ethanol tank is $60 000 alone. How many people can that one ethanol tank serve? I can install 30K home Lvl 2 chargers for that amount. There’s not a gas station in the country that can serve 30K customers in a week, much less on a single tank on a single night. What’s a better use of tax payer money?

You’re saying:

Natural gas => methanol =>distribution network => engine

I’m saying:

Natural gas => MWh =>distribution network=> electric motor.

Which process has lower input costs?

If we’re gonna start from scratch we should maximize road miles. The infrastructure considerations are manageable and (fossil fuel) electricity is much cheaper to produce and distibute than a gallon of anything. The electric motor gets you farther on less energy and pollution.

When will this shift to a new 20:1 methanol power train happen? Another 20 years? Maybe that would have been an option in 1980 not in 2010. We don’t have that much time economically or geopolitically.

There is no real reason why someone other than the oil companies can not start up an E85 station, and many independents are appearing. As RR has said many times, if there is money in it, they will climb aboard, eventually.

I don;t know how you can claim to install 30,000 home chargers for $60k, that is $2 each?

if you do install this many home charging stns, you are guaranteed to have to do some distribution upgrades, particularly the transformers.

As for the taxpayer money, well, I don;t think it should be being used for either! Government does not have to do everything, it can decide not to spend, and certainly not to pick winners.

And what do you mean by “maximise road miles” I think it is in the interests of the country (and the world) to do just the opposite. Indeed if there were much less personal road miles travelled, oil would not be an issue.

And how can you say fossil electricity is cheaper to produce and distribute than a gallon of anything? Electricity at $0.10/kWh is equal to $28/GJ. Gasoline, at $3/gal is equivalent to $ 22/GJ. CNG is distributed, and sells retail today for less than $2/GGE, which is $14/GJ.

So clearly,energy can be produced and distributed, and certainly stored, much cheaper than electricity.

As for the shift to a 20:1 engine, well it could happen very quickly, if desired (the desire is the hard part). Such an engine can be built using a diesel block (for high compression) and existing systems for fuel delivery -port fuel injection for alcohols, gas carburettion for CNG. It would be far easier, faster, and cheaper, to mass produce such engines to retrofit existing cars, than build all new electrics.

After all, in WW2, millions of vehicles were adapted to run on woodgas (a biofuel!) in the space of two years, you couldn’t change to electric in anything close to that time. But we could shift to alcohol/CNG in such a time frame, if we had to.

Below is a 2008 DOE study on EV infrastructure costs as I said nothing that’s not manageable. They think that building more charging locations is more cost effective than adding onboard battery range. Even if the battery costs a blue sky $300/kwh.

“Electricity at $0.10/kWh is equal to $28/GJ. Gasoline, at $3/gal is equivalent to $ 22/GJ. CNG is distributed, and sells retail today for less than $2/GGE, which is $14/GJ.”

How much would that gasoline be if you could go to a faucet in your garage and fill up a can? CNG is a gas. I guess I should have said “liquid” gallons, and its not available nationwide. Again what’s more efficient? One big NG plant powering thousands of Evs or thousands of vehicles burning NG?

“As for the taxpayer money, well, I don;t think it should be being used for either! Government does not have to do everything, it can decide not to spend, and certainly not to pick winners.”

The role of government in energy policy can and always will be debated. But you agree that the only reason E85 is around is because it’s a political winner. Your arguments contradict. Do you want ethanol or not? Perhaps, we should wait until the private sector sees the light of methanol? The government is allowing people to choose between gasoline and E85–they’re filling their FFVs up with E10 gasoline 90% of the time.

“And what do you mean by “maximise road miles” I think it is in the interests of the country (and the world) to do just the opposite. ”

We want to maximize road miles/joules. The electric motor does this better than a carnot cycle ICE. It would be great if the average driver reduces how much he drives. This would also make Evs more attractive. There is a fixed and declining amount of fossil fuel energy and our economy requries (declining?) private vehicle road miles. The best course of action is to use the available energy in the most efficient way. Turning natural gas into methanol/ethanol is an intermediate step that adds to input costs. The alcohol fuel is then converted to heat by an engine with road miles being a by-product.

“As RR has said many times, if there is money in it, they will climb aboard, eventually.”

Ethanol has had decades to mature and still “there is no money in it”. Evenutally = THE oil crisis.

“But we could shift to alcohol/CNG in such a time frame, if we had to.”
Fifty people could be living on the Moon in two years “if we had to”. Could we retrofit current vehicles with alcohol/CNG without government leading us like sheep? The consumer has picked a winner–Hybrids and Evs. Or are you against free market econmics?

Will the adoption rate be fast enough to forgoe some kind of energy crisis? Probably not.

I can easily see how they came to that report’s conclusion that more charging stations are cheaper than more batteries on the car. I can also see how the EV owners will love that too – they get to use charging stns paid for by someone else (likely gov subsidised), and they don’t have to pay for the batteries.

BUT this plan then has the cars “opportunity charging” at shops, offices etc, during peak times of the day, which goes against one of the major benefits of electric cars – off peak charging and no addition to on peak loads.

As for the fuel pricing, you can get a gallon of CNG on tap in your garage, for about double the cost of your home EV charging station. But then you are only paying your residential rate for gas, about $9/GJ, one third the cost of electricity! Your engine will only be about 20% average efficiency, but the EV is only about 75% round trip efficiency too, so they come out close. And, you can convert your car to CNG for much cheaper than buying an EV.

My real issue here was with your blanket statement: “(fossil fuel) electricity is much cheaper to produce and distibute than a gallon of anything.” And this is simply not true, in for any liquid fuel. Yes, electricity has a much higher exergy, and mis cheaper per mile for a vehicle, etc , but that is not what you said, and, it would seem, not even what you meant. So say what you mean, and make sure what you say is correct.

The role of government in energy policy can and always will be debated. But you agree that the only reason E85 is around is because it’s a political winner.

Both of these statements are certainly true. I think ethanol is a great fuel, I also think that, presently, it is not a cost competitive one, and should not be subsidised. What I want is an end to government pork barrelling by picking specific targets for subsidies etc. A much better solution, in my opinion, is an import tax on oil, of say $130/barrel (about $3/gal) and then let the domestic alternatives go from there. Let the consumers pick the winners, but all the competitors are on the same field.

We want to maximize road miles/joules. The electric motor does this better than a carnot cycle ICE.

I do agree with the first part, but not the second – this is not true if the electricity is coming from a coal fired power plant. However, I do prefer to see a coal fired electric car than a Saudi oil powered one.

Turning natural gas into methanol/ethanol is an intermediate step that adds to input costs.

This is true, but with methanol currently at $1.05/gal, or $15.40/GJ it is clearly not a big cost.

Ethanol has had decades to mature and still “there is no money in it”. Evenutally = THE oil crisis.

This is also true, and that is why I think the mandate and subsidy should be abandoned. The oil crisis will indeed force action, as it did in WW2 and 1973. Otherwise, if people and government do not perceive a crisis, change is very slow.

Could we retrofit current vehicles with alcohol/CNG without government leading us like sheep?

Absolutely, if gasoline is expensive enough.

The consumer has picked a winner–Hybrids and Evs

I would say that with a gov tax credit of $7500 for an EV, and with only a handful of EV’s on the road yet, the government has certainly picked this horse as its winner, we are yet to see if the consumers do. A $99 refundable deposit does not count as meaningful gauge of customer interest.

I am all for free market economics, and, in the US, that is increasingly NOT what we see. The business of picking winners to subsidise has led to R&D efforts “following the money”, and resources being diverted from other, potentially better, uses. Lots of money has been wasted on some of these biofuel schemes, and fuel cells, etc etc.

I do agree the adoption rate of any of this will not be enough to avoid a real crisis, and history shows that real crises are often needed to precipitate real change, I can;t see oil being any different, unfortunately.

You’re right, I went overboard getting on Rufus’s case about him constantly touting the new flex-fuel Buick Regal without being willing to commit to buying one.

I do stipulate it is possible to be an advocate of something without wanting to buy one, as is your case with respect to the Leaf and Volt. But at least you haven’t been constantly bombarding us with pro Leaf and Volt comments.

Electricity has higher equipment costs (the battery) then any of the above. However looking back at history the energy choices made now could well be in place for the next hundred years. Minimizing energy consumption is the best investment long term.

This 2006 study by the DOE showed that we could switch 84% of the small vehicle fleet to EVs without increasing capacity–if they were charged off peak. It claims that the U.S. energy grid is only operating at peak 5% of the year. That idle capacity represents a huge energy reserve that could be diverted towards transportation.

Here’s an article that talks about peak demand from EVS and transformer capacity. A million cars charging at peak in California won’t have a noticeable effect. Transformers will be more stressed in EV neighborhoods so utilities will have to be proactive.

“Your engine will only be about 20% average efficiency, but the EV is only about 75% round trip efficiency too, so they come out close.”

Taking your prices of $.028 MJ electricity; $.09 MJ NG, electricity is about even on $/miles with natural gas. The economy still gets 3x more miles/ joule with electricity. Then there are distribution costs. What would be the $/joule to setup thousands of CNG stations across the country. How many miles of pipeline will have to be laid? How long will that take? The DOE thinks that no major infrastructure work will have to be done to accommodate millions of EVs.

NG is currently cheap but looking at the price over the last 40 years it jumps around a lot more than retail electricity. If we want to lower our overall energy consumption we shouldn’t expand home usage of natural gas for cooking, heating, or transportation. The easiest way to make homes more energy efficient is to make everything electric.

“I do agree with the first part, but not the second – this is not true if the electricity is coming from a coal fired power plant.”

Coal power plants are between 30-49% efficient. The efficiency of a modern gasoline engine is about 20%. So if you were charging your EV with an old coal plant and if about ten percent was lost in transmission/charging more energy would be used than in an ICE. Possible but unlikely.

“And, you can convert your car to CNG for much cheaper than buying an EV.”

Yes, but can you finance the $10 000(?) it costs to do the retrofit? Someone with that much to plop down sounds like an EV buyer. I couldn’t find what the efficiency of a gasoline engine that’s been converted to run on CNG.

Amongst all this are some things we can agree on, set lets highlight them;

gasoline ice vehicles, in their current form, are a colossal waste of energy

an electric vehicle IS the most energy efficient personal vehicle (joules/mile)

it is also the most expensive to buy and own, but the cheapest fuel/mile

alcohol and ng can substitue for both gasoline and diesel, with appropriate modifications

much better efficiency is had out of high compression (diesel) engines than gasoline

more efficient still is a train, where they exist

most efficient of all is to restructure the “economy” to minimise both transport needs and general energy consumption (heating, cooling etc

So here is what I conclude from that list;

EV’s are better for smaller vehicles and alcohol/cng for bigger ones. Smallest of course being an electric bike, but a small two seater commuter (similar to the original GM EV-1) would seem an ideal fit. For “family sized vehicle” you end up carrying around a lot of batteries to move a large vehicle a shorter distiance.

ICE’s, running on alcohol/cng/diesel are the way to go for larger vehicles (family sedans, suv’s, pickups)

If you are building new ICE vehicles, they should be a hybrid, or have some sort of regenerative braking (could be pnuematic). If it is an electric hybrid, it is easy to add some plug in capability

Either type of vehicle is going to be more expensive than what we use today, as are the fuels, incl electricity that power them. This fact alone suggest that we should buld more transit, where appropriate,a nd that more people will use it.

As for how to make this happen, here is my suggested plan;

The tax credit for EV’s is extended to all vehicles, and is a sliding scale, on the basis of joules/mile, on a “well to wheel” basis. For electricity, this can be based on CCGT at 60%, 5%transmission loss and the rest (charge/discharge and motor eff) is on board, so we measure kWh at the plug. This way there is a comparison between all vehicles. For plug in hybrids, there can be a standard model based on the elec only range.

Change the ‘cash for clunkers program’ so that it is paid out when you scrap the old car, regardless of whether or not you buy a new one – some who gives up their car for a bike or train is just as deserving of the credit.

There is a carbon tax or oil import tariff, equivalent to about $3/gallon

No more feed in tariffs for wind and solar, they get their carbon credits and that’s it, though they may sell at different rates as they are on the spot market or TOU rates.

put the r&D and subsidies into storage and load management efforts

I think it needs to be recognised that BEV is at its best in small, light vehicles, and small vehicles are what most people SHOULD be driving. Such small vehicles are also efficient on alcohol fuel too. We can’t force people to drive such vehicles, but they are the only ones that should be getting any sort of subsidies.

Actually, that thought has occurred to me in the past, but I came to my senses.

And, I live in Canada (and am an Australian citizen) so no hope of doing anything in the US, and while I could do something in Canada, that makes no difference to the US anyway.

And, from what I see, even if you make it to office, it doesn;t mean you can get anything done. As we have seen, all of the last eight presidents espoused a goal of energy independence, and it has not been achieved.

While we have come up with a government led plan, the chances of it (or any govt led plan) being implemented and being successful, are small. If we could come up with some kind of market driven plan, it could happen without gov’t but I cannot, presently, think of such a plan! But if there was money in it, it would happen, and fast. If there is not, we are left with government having to push it, and that is always a slow process!